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Amgen, manufacturer of Enbrel, to retrieve Celgene & # 39; s Otezla for $ 13.4B. Will the FTC strike back?




Looks like Amgen might not buy Alexion Pharmaceuticals. Instead, it increases with psoriasis, where it already sells blockbuster TNF inhibitor Enbrel.

Amgen Monday said it will take in Celgene's Otezla for $ 13.4 billion in cash, a purchase that could help Bristol-Myers Squibb move forward with its planned $ 74 billion acquisition of Celgene, per agreement with US antitrust authorities.

The dollar amount easily dwarfs some recent biopharma deals for entire companies, and shows enthusiasm for immunology and inflammatory markets, led by the world's best-selling drug and Enbrel rival, Humira. And that's significantly above the price hikes that analysts previously estimated for Otezla, suggesting an intense bidding process for the rapidly growing psoriasis drug whose second-quarter sales increased 31[ads1]% year over year to $ 493 million.

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"Otezla represents an exciting opportunity to strengthen Amgen's presence in inflammation and continue Amgen's geographical expansion," Amgen CEO Robert Bradway said in a statement.

Otezla is an attractive product that, although still in the early stages of its life cycle, is already in high sales. But Bristol was forced to sell Otezla to win the U.S. Federal Trade Commission (FTC & # 39; s) approval, simply because it overlaps with BMS & # 39; s own investigative TYK-2 inhibitor, BMS-986165. How will the anti-competition watchdog allow two marketed blockbuster medications in the same indications to be placed under the same roof?

Amgen is not concerned. "We have a high degree of confidence, but we want to respect the FTC process and they will review it for the benefit," Bradway said of the conversation. "You can probably also conclude that the seller feels that we are a strong buyer and a suitable buyer of Otezla."

At least, JPMorgan analyst Cory Kasimov shares Team Amgen's optimism because "BMS / Celgene would eventually sell this asset to a buyer that they felt confident reducing further FTC scrutiny," it wrote in a Monday note. [19659003] COMPULSORY: In a crowded psoriasis field, who could imitate Celgene & # 39; s Otezla – and at what cost? Over the next five years, the street's consensus now reaches $ 2.5 billion in peak sales before it expires in the US in 2028. At that rate, provided the deal closes as expected by the end of 2019 , Amgen will at least be able to get the investment back in its entirety by 2024.

Based on this estimate, analysts at RBC Capital Markets, Jefferies and Credit Suisse had previously expected a deal to reach 10 mill. In addition to Amgen, several immunology players were suspected as potential buyers, including Cosentyx marketer Novartis, Tremfya seller Johnson & Johnson, AbbVie, Eli Lilly and Gilead Sciences, who hope to soon approve an oral JAK inhibitor filgotinib. But now Amgen has emerged as the winner and has gone well past the $ 10 billion mark.

Jefferies analyst Michael Yee nevertheless called it a "smart deal" for Amgen in an investor note Monday. Although the price went up in a competitive process, Amgen is an excellent buyer of Otezla, as Enbrel's sales force could help it grow around the world, he said.

Currently, Otezla is approved in three indications in the United States, including moderate-to-severe plaque psoriasis, psoriatic arthritis and the latest addition, gastric ulcer associated with Behçet's disease. Several ongoing clinical programs may lead to further brand extensions. These include mild to moderate psoriasis, scalp and genital psoriasis as well as various pediatric indications, Amgen's R&D chief David Reese said during the interview.

"We are thinking more about coming on the development front and feeling very good in terms of clinical profile and the likelihood of succeeding with these indications," he said.

When it comes to geographic expansion, Bradway Otezla said "fits particularly well with some of the major European markets," both with Big Biotech's ongoing launch of Amgevita, a Humira biosimilar, and its existing sales potential.

Last week, rumors emerged that Amgen was looking to buy Alexion, which makes $ 3 billion a year of medicine Soliris to treat rare blood and neurological diseases, as well as its follow-up product, Ultomiris. Analysts immediately gathered behind that deal because, like Otezla, it could immediately add some short-term revenue growth for Amgen, which suffers from copycat competition for drugs including Neulasta and Sensipar.

Editor's Note: This story has been updated with comments from analysts from Jefferies and JPMorgan.



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